Building the Platform
RIM has, throughout its history, followed two imperatives: make the best possible proprietary device for wireless e-mail and follow whatever course will increase the size of that market. Started in 1984 as a firm that built electronic devices for other companies, RIM signed its first deal with General Motors, to deliver a networked display system that scrolled words across LED signs in GM factories. The idea behind what eventually became the BlackBerry system dates to 1989, when RIM worked on an outsourced project for Ericsson. As RIM focused more on wireless data, it started manufacturing its own devices. Pager companies like Motorola had tried to combine e-mail with pagers, but none of the devices achieved much success. By the early 1990s, even PC-based e-mail had yet to take off, and many in the telecommunications industry saw wireless e-mail as a product that people did not really want or need.
RIM proved the viability of this market in stages. First, it received an order in 1997 from BellSouth for $50 million worth of wireless e-mail devices. BellSouth was offering a pioneering service intended to allow data transmission in applications like inventory tracking for rail transport. Its so-called Mobitex network used Ericsson technology, but it still needed a supplier to build a hardware component for consumer use. The opportunity gave Research in Motion a critical test network for its device.
The opportunity also convinced RIM that it ought to seek out a larger market for its new device, known within the company as PocketLink. In 1998, RIM began working with a California-based branding agency called Lexicon. One Lexicon strategist thought the gadget’s keyboard resembled the seeds of a berry; the BlackBerry launched in January 1999. Instead of employing a stylus and handwriting recognition software, the device used a small, thumb-operated qwerty keyboard. But as impressive as its physical design was, the truly remarkable thing about the BlackBerry was that RIM provided everything needed to make it work: the device itself, the software that made it run, the servers that routed e-mail from the wired network, and the airtime that RIM leased from mobile-phone carriers. “As first mover in the market, we had an opportunity to build a brand around a new category,” said Dave Werezak, vice president of RIM’s Enterprise Business Unit.
By mid-1999, months after the BlackBerry launch, RIM also began selling BlackBerry Enterprise Servers, mostly to corporate clients. These servers were installed in customers’ IT departments and allowed BlackBerry users to send and receive e-mail from almost anywhere. Furthermore, the servers, which worked with RIM’s integrated e-mail management system, allowed for the coördination of wired and unwired e-mail, so that customers could use their BlackBerries to access the e-mail accounts they used at the office.
Businesspeople were soon addicted to “push e-mail” (so called because new messages are sent directly to the device, rather than requiring a user to request them from a server), and RIM decided to alter the way it sold BlackBerry, in an effort to increase the size of the market. For the first year and a half that the BlackBerry was on the market, RIM leased airtime from carriers for the transmission of data. But in June 2000, it decided to switch course and instead let carriers sell the BlackBerry service directly to customers. In the new arrangement, RIM received up to 20 percent of carriers’ fees. With thousands of the carriers’ salespeople pushing RIM products, the service quickly spread globally: in 2002, RIM sold 360,000 devices; in 2004, it sold 2.3 million.
Just as RIM was sewing up the market for wireless e-mail, events outside its walls were helping to make that market vastly richer. By 2002, a new nonvoice international wireless standard, the General Packet Radio Service (GPRS), had emerged. Up until then, BlackBerry data traveled largely on the data-only Mobitex network, which didn’t offer as much coverage as the new network. GPRS uses existing GSM (Global System for Mobile Communications) radio base stations and converts wireless data into standard Internet packets, enabling interoperability between the Internet and the GSM network at up to 10 times the speed of prior systems. The increased speed of data transmission and the convergence of voice and text data were attractive to both carriers and handset makers (who could offer data and voice in a single device). By the time RIM announced its agreement with Nokia, a new age had dawned: e-mail could now be sent and received on cell phones. With the hardening of the GPRS network, handset manufacturers could offer data-transmission software supplied by RIM.